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3 Key Health Care Components Explained

Health careHealth care coverage issues are continually evolving and are extremely complex. Clients turn to their CPAs for advice when choosing a health care plan that suits their needs. With the Supreme Court’s recent ruling ensuring that the Patient Protection and Affordable Care Act is here to stay, CPAs should take this opportunity to explain three key areas of Medicare and the Affordable Care Act to help their clients avoid missteps. These areas include enrollment periods, provider networks and qualifying events.

Enrollment Periods

Medicare has many moving parts, and each part has separate enrollment issues. For example, Medicare Part A (hospital insurance) enrollment is straightforward, can be done online through the Social Security Administration’s website and for the vast majority of Americans is premium-free. Medicare Part B (medical insurance), on the other hand, has three enrollment periods: initial enrollment around your 65th birthday, special enrollment for those who have active group coverage beyond age 65, and general enrollment during the first quarter of every year for individuals who did not qualify for special enrollment and failed to enroll during initial enrollment. In other words, general enrollment is typically the fallback enrollment opportunity for those who didn’t plan well.  The general enrollment period is punitive with a gap in coverage and lifetime premium penalties. No one wants to incur the costs associated with Part B lifetime premium penalties, so it’s key to understand the rules and meet enrollment deadlines for the initial or special enrollment periods to avoid general enrollment period penalties.

Unlike employer groups who have flexibility and can change health care carriers on a monthly basis throughout the year, individuals are restricted to one annual enrollment period. During this time, individuals can purchase coverage from the health insurance marketplaces, such as Healthcare.gov, created under the Affordable Care Act. After the enrollment period ends, an individual is locked into that plan, unless that person has a qualifying event that creates a special enrollment opportunity. Open enrollment for 2016 begins Nov. 1, 2015 and ends Jan. 31, 2016.

Provider Networks

Medicare provides a wide choice of providers, although in some areas, doctors are opting out, as they would prefer to be paid in cash. Medicare Advantage plans differ, so once again, it’s important to understand the network and if there is an out-of-network benefit. There are many more Advantage products than there used to be, but clients should be familiar with the network restrictions if they are enrolling in an HMO-type product.

The Affordable Care Act has led to growth in insurance products with more limited networks of physicians and hospitals. It is particularly important for those who are dealing with serious illnesses or who those who have residence in more than one state to understand the provider network before selecting a plan. Out-of-network benefits often provide little protection because there is no contract between the provider and insurer. As a result, there are no limits to what an out-of-network provider can charge a patient.

Qualifying Events

Qualifying events affect coverage and allow a person to have different coverage choices. Examples of a qualifying event include:

  • 26-year-old children losing eligibility for coverage on their family’s plan (under Federal law; states can differ),
  • job loss,
  • COBRA ending,
  • marriage,
  • divorce,
  • retirement,
  • death of a spouse, and
  • relocation.

If you have clients on Medicare who relocate, that move may affect their Medicare Advantage enrollment or Medicare Part D enrollment. Also, many private Medicare supplements are not portable and many states allow underwriting of applications for new supplements outside the initial enrollment period. As a result, there is no qualifying event protection and an application can be denied.

With individual coverage in compliance with the Affordable Care Act and the Health Insurance Portability and Accountability Act of 1996 (HIPAA) regulations, a person has 63 days from the date of the qualifying event to apply for new coverage outside the annual open enrollment period. The new insurer has discretion as to what documentation may be requested.

Proactive Health Care Planning is Invaluable for Clients

Health care coverage is a critical financial protection and in many situations, planning is complex. Proactively considering enrollment periods, provider networks and qualifying events is critical to maintaining proper coverage and avoiding gaps. CPAs can assist their clients throughout the process.

AICPA Resources to Help CPAs Serve Clients in This Area

I presented a comprehensive session on navigating Medicare and the Affordable Care Act at the 2015 AICPA Advanced PFP Conference. To obtain a recording of this session (complimentary for attendees; available for a fee for others), visit the AICPA Conference Materials website. Additionally, the AICPA PFP Section offers a free excerpt from The CPA’s Guide to Financing Retirement Healthcare—a handbook explaining the basic rules of Medicare along with planning tools and appropriate adviser responses to commonly asked client questions—at aicpa.org/pfp/retirement.

 

Maura Carley, Healthcare Navigation, LLC. Maura Carley founded Healthcare Navigation, a leading health insurance consulting and advocacy firm, in 1999. She is a former hospital and insurance company executive. She has a Master’s of Public Health degree from Yale University, completed the Kaiser Permanente Executive Program through Stanford University and is a fellow in the American College of Healthcare Executives.

Health care courtesy of Shutterstock.

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